AUTO MARKETING: DEALER-HELD CHAIN OUT TO SHOW IT KNOWS BIZ BEST: DRIVER'S MART IS INSIDERS' ANSWER TO OUTSIDER ENTRY

Driver's Mart World-wide represents the insider's answer to a used car-driven retail revolution fomented by those from outside the business.

An elite group of dealers created the chain in early 1996, bound by a single belief: they still know more about selling cars than anybody else. The group now consists of 24 high-volume dealers, many of them Saturn franchisees, whose 350 new-car franchises rack up about $6 billion in annual sales.

WISCONSIN FIRST

The chain, which features a bare-bones corporate structure and outsourcing of several functions, is growing at a slower pace than its primary competitors, CarMax and AutoNation USA, in its rollout schedule. In fact, at press time, Driver's Mart had only one used-car store open, in Neenah, Wis., with stores in Utah and Florida coming this spring.

To date, Driver's Mart investors have put $300 million into building new stores or converting existing ones, of which there are 40. Unlike CarMax and AutoNation USA, Driver's Mart plans to spread itself across the country right from the start and not concentrate on the Sunbelt states.

Driver's Mart wants to sell used cars to a broad range of customers, but President Thomas Eggleston says the company's research shows a certain kind of customer

responds particularly well to the concept: young (ages 25 to 40), value-conscious families on a limited budget. TranSouth Financial Corp. will handle subprime financing for the chain.

Those young customers are likely to be technologically savvy and hooked up to the Internet, which Driver's Mart will rely upon heavily.

Mr. Eggleston, former chief operating officer of Amway Corp., sees the retail experience divided into three channels: small stores, superstores and the Internet.

"Driver's Mart is the convergence of the Internet with a small, personalized store experience-in effect, a third channel which in effect combines the effectiveness of each of the other two channels," Mr. Eggleston says. "Our entire store strategy is premised heavily on the Internet being an extension of the store experience."

KIOSKS ONLINE

Customers going online (http://www.drvsmart.com) will find the Driver's Mart kiosk software at their fingertips. Internet customers are likely to arrive at a Driver's Mart store already knowing which vehicles they want to test drive; the store may have an envelope waiting with those keys.

Driver's Mart stores will contain no more than 600 cars, but Mr. Eggleston says the inventories will be closely matched to customer needs by region. For example, Driver's Mart research shows only 12% of buyers at the Wisconsin stores will buy imports, while on the West Coast or in Florida, the percentages of import buyers could run 60% or higher.

Driver's Mart was created with a virtual-company corporate structure. To accomplish this goal, the company has turned many functions to corporate partners, which will become de facto departments of Driver's Mart. For example, ad agency Warwick Baker & O'Neill, New York, will become the marketing department and report to Jane Richtsmeier, director of marketing for Driver's Mart and a former staffer at DDB Needham Worldwide, Chicago.

The bare-bones structure idea is a nod to management guru Peter Drucker, who urges companies to outsource as much as they can.